Google starts looking for allies in patent “self-help”

Google has been vocal about the "patent troll" problem for years now. It's an issue that has started to get seriousattention from the government, and for good reason. Newest statistics show 61 percent of patent lawsuits are now filed by entities with no business outside patent-licensing, costing an estimated $29 billion each year in direct legal costs.

While many tech companies continue to push for a legislative fix to the problem, Google has decided to engage in some patent "self-help," as well. A new company initiative has synthesized some ideas that have been kicking around legal conferences for several months now about things that victims of patent trolls could do to help themselves.

One serious, and relatively new problem: many operating companies tend to keep "feeding the trolls," by selling off patents that end up in the hands of non-practicing entities.

"In a growing trend, companies are selling patents to trolls that then use those patents to attack other companies," writes Google lawyer Eric Schulman in a blog post on the new patent initiative. "In some cases, those companies arrange to get a cut of revenue generated from the trolls’ suits."

Google has faced that issue itself. British Telecom, for example, not only sued Google over patents directly, it handed off patents to Suffolk Technologies, a patent-holding company. That behavior caused Google to file its first patent infringement suit last month. In December, a holding company called MobileMedia Ideas won a jury trial, wielding patents from Sony and Nokia.

A new company website introduces four kinds of royalty-free patent licenses it suggests companies might use to combat the problem.

License On Transfer Agreement: Under this agreement, every participating company would agree that when they sell their patents, they become licensed to the entire group. Companies could use their own original patents to fight each other, while they own them, but couldn't hand them off to anyone else.

Non-Sticky Defensive Patent License (Non-Sticky DPL): This would simply stop companies from asserting their own patents against each other while they're participating in the license. Companies would be allowed to withdraw, and could then use their patents offensively; however, damages would not be available for the period in which they were in the pact. It includes a transfer provision, so if one company handed off a patent to a troll or other aggressor, the patent must first be licensed to all the DPL participants.

Field-of-Use Agreement: Similar to the Open Invention Network, which provides free patent licenses to companies that agree not to assert any patents against the Linux system. One danger of using a license like this is that patent claims could be drafted to avoid whatever field of use is defined in an industry agreement. Certainly, the OIN's agreement hasn't stopped Linux-using companies from being attacked by trolls.

As a first step, Google is asking operating companies of any size to take a survey about which of these licenses, if any, appeals to them. It's gathering the responses by April 9. A lot of companies are thinking about the issue right now already, especially since the nation's antitrust regulators, the Federal Trade Commission and the Department of Justice, have asked for public comment to be submitted about what they call "patent assertion entities" by April 5.

Even if one of these agreements were widely adopted, it wouldn't affect some parts of the patent troll problem. Plenty of non-practicing companies use patents that originate with independent inventors, not big companies; some companies get into the patent-trolling business and then acquire their own patents, from their own research.

Still, a defensive patent license could hamper the ability to throw more and more intellectual property into a growing marketplace of patent "ammunition." Once-successful companies that are now struggling, or simply have expired patents or business lines, currently have a strong incentive to hand their patents off into the open market, where they can cause problems for competitors.

We're still a long way from a world in which companies give up the ideology of patents-as-swords and simply compete "on the merits of their products or services," but more companies and reformers are getting interested in taking some first steps.

31 Reader Comments

…some companies get into the patent-trolling business and then create their own patents, which blossom from their own “research.”

Maybe those scare quotes are meant to just slam independent entities who work in a field, e.g., especially networking or manufacturing a complex product like airplanes or cellphones that have interesting and useful subsystems, where the inventive engineering company has no hope of starting the huge businesses that practicing their invention would entail, and can only do its work by licensing its work to others.

There are many firms like that, household names that provide valuable services. Dolby Labs. Fraunhofer (MP3s). Phillips (out of the CD/DVD businesses that it originated). Surely Joe isn't trying to lump these all under the umbrella of trolls, due simply to the fact that they've had no trouble getting companies to license, rather than just take, their technologies.

So it looks to me as if they're meant to deprecate the integrity of any patent that is inconveniently asserted against another. Which essentially means, any patent that the patent author deems to have been infringed. Which — since if e.g., Google, merely published the details of what it was doing, would prevent any other patent in an area due to non-novelty — means virtually every patent.

If that's the case, then it seems odd that Google is proposing some sort of a Pledge of Chastity legal solution to what many people believe is the underlying problem, that of low patent quality.

Net-net, I don't get why this type of band-aid contributes anything other than a bit of a PR boost for the notion that all patents are bunk, a line that Google's been pushing for a while.

…some companies get into the patent-trolling business and then create their own patents, which blossom from their own “research.”

Maybe those scare quotes are meant to just slam independent entities who work in a field...

Or maybe it applies to the people who patented the idea of looking up real estate listings on a map and 15 years later suing realtors over it...

Nah, can't be referring to them.

Quote:

There are many firms like that, household names that provide valuable services. Dolby Labs. Fraunhofer (MP3s). Phillips (out of the CD/DVD businesses that it originated). Surely Joe isn't trying to lump these all under the umbrella of trolls, due simply to the fact that they've had no trouble getting companies to license, rather than just take, their technologies.

…some companies get into the patent-trolling business and then create their own patents, which blossom from their own “research.”

Maybe those scare quotes are meant to just slam independent entities who work in a field, e.g., especially networking or manufacturing a complex product like airplanes or cellphones that have interesting and useful subsystems, where the inventive engineering company has no hope of starting the huge businesses that practicing their invention would entail, and can only do its work by licensing its work to others.

There are many firms like that, household names that provide valuable services. Dolby Labs. Fraunhofer (MP3s). Phillips (out of the CD/DVD businesses that it originated). Surely Joe isn't trying to lump these all under the umbrella of trolls, due simply to the fact that they've had no trouble getting companies to license, rather than just take, their technologies.

I won't address all the details of your comment, but I will just say that no, I wasn't including companies with actual product lines like Philips or Dolby when I wrote about patent trolls that acquire their own patents. I think that's pretty clear in the post.

I did remove the quotes around "research" since that seemed to imply something that I didn't mean.

Whilst in some ways a interesting step, I'm not sure this necessarily removes the threat of an oligopoly situation where the big players get in bed together and collude to keep smaller players out and the market to themselves.

Why on earth would I voluntarily license my patents under those terms? If I paid a fortune in legal bills to get a patent for defensive and/or offensive use ... why reduce it's value by making it unsaleable? It's a "tragedy of the commons" problem. If a company can make $1 by selling their patents to an NPE, even if that costs the overall industry $100 in future legal bills ... where is the incentive to selflessly forego that $1 in revenue? Until the incentive problem is addressed, I don't see any reason to hope for broad-based adoption of such a high-minded licensing scheme.

Whilst in some ways a interesting step, I'm not sure this necessarily removes the threat of an oligopoly situation where the big players get in bed together and collude to keep smaller players out and the market to themselves.

Indeed, there's no place for small guys like us. Even if I invented something honestly patent worthy, there's no chance of me bringing it to market. I would be crushed under law suits. Selling out would be one of my best options.

Any wrangling that makes trolling less potentially lucrative is good but frankly trolls don't care about Google much while they may toss out a lawsuit in hops of a sweet settlement most target instead individuals and small or struggling companies that'll just settle thing is the last thing a troll wants is a law suit so they go after those who won't or can't defend and grab some quick settlement cash.

Sounds to me like this is more likely to protect the big boys from gouging eachother with patents directly or through third parties.

Simple fact is all of this talk about "non-practicing entities" is smoke and mirrors over the real and deep issues festering in the patent system. If all the patents being filed were solid well documented patents of non trivial processes or systems then it wouldn't matter if the company suing had any intention of making a product with it or just licensing the patent. However when Maps of houses for sale, and rounded rectangles are issued as valid patents abuse of the system runs rampant.

The patent office needs to be staffed by competent professionals,able, willing, and empowered to throw out patents that lack merit without the patents having to be challenged in the courts. Issuing over broad patents on systems and procedures that should not be patent-able is coming back to bite us now.

Why on earth would I voluntarily license my patents under those terms? If I paid a fortune in legal bills to get a patent for defensive and/or offensive use ... why reduce it's value by making it unsaleable? It's a "tragedy of the commons" problem. If a company can make $1 by selling their patents to an NPE, even if that costs the overall industry $100 in future legal bills ... where is the incentive to selflessly forego that $1 in revenue? Until the incentive problem is addressed, I don't see any reason to hope for broad-based adoption of such a high-minded licensing scheme.

The incentive is the reduced risk of some other company having the same thought and costing you some part of that $100. This solution is based on the expectation that a large number of companies will join this initiative and it will work only when a large number joins in.

We're still a long way from a world in which companies give up the ideology of patents-as-swords and simply compete "on the merits of their products or services," but more companies and reformers are getting interested in taking some first steps.

Maybe it's time to just abolish the rent-seeking that is patent and copyright law, allowing an even playing field.

Every other part of business law is keen to avoid monopolies, but here we have monopolies that are government-endorsed!

Why on earth would I voluntarily license my patents under those terms? If I paid a fortune in legal bills to get a patent for defensive and/or offensive use ... why reduce it's value by making it unsaleable? It's a "tragedy of the commons" problem. If a company can make $1 by selling their patents to an NPE, even if that costs the overall industry $100 in future legal bills ... where is the incentive to selflessly forego that $1 in revenue? Until the incentive problem is addressed, I don't see any reason to hope for broad-based adoption of such a high-minded licensing scheme.

If you recall, the point of "tragedy of the commons" is that everyone will ended up worse off because everyone only does what's best for himself. So if a "tragedy of the commons" is recognized, then the logical course of action is to work cooperatively.

For example, if company A can sell its patents and make $x bucks from other companies in the field, then company B, C, D, E... can all do the same as well, which would quickly turn into a zero sum game where only lawyers got rich. Not to mention that smaller fishes would get sued into oblivion in the process.

Why on earth would I voluntarily license my patents under those terms? If I paid a fortune in legal bills to get a patent for defensive and/or offensive use ... why reduce it's value by making it unsaleable? It's a "tragedy of the commons" problem. If a company can make $1 by selling their patents to an NPE, even if that costs the overall industry $100 in future legal bills ... where is the incentive to selflessly forego that $1 in revenue? Until the incentive problem is addressed, I don't see any reason to hope for broad-based adoption of such a high-minded licensing scheme.

If you recall, the point of "tragedy of the commons" is that everyone will ended up worse off because everyone only does what's best for himself. So if a "tragedy of the commons" is recognized, then the logical course of action is to work cooperatively.

For example, if company A can sell its patents and make $x bucks from other companies in the field, then company B, C, D, E... can all do the same as well, which would quickly turn into a zero sum game where only lawyers got rich. Not to mention that smaller fishes would get sued into oblivion in the process.

Not necessarily, if a company A believes their patent is worth more than that of the company B. In addition, if the company B wants to use company A's patent in a rival product to that of company A, the company A would like to get more out of it than the level playing field.

We're still a long way from a world in which companies give up the ideology of patents-as-swords and simply compete "on the merits of their products or services," but more companies and reformers are getting interested in taking some first steps.

Maybe it's time to just abolish the rent-seeking that is patent and copyright law, allowing an even playing field.

Every other part of business law is keen to avoid monopolies, but here we have monopolies that are government-endorsed!

Creating and maintaining that level playing field (or at least one that encourages new entrants) would be the real trick though. I can appreciate that there are many industries (software being one) with fairly low barriers to entry, where first mover advantage and early brand recognition will let a company grow. I can also picture the other end of the scale, where a company is producing stuff that is either so highly specialised or has large enough startup costs that other companies won't bother to compete as it's easier and cheaper to buy in goods or services from a specialist than do it in-house.

To me, it looks like that leaves a lot of room in the middle where new businesses are competing with established players who can reverse engineer new products, make their own 'good enough' versions and outcompete the new guys on economies of scale, superior marketing, better supply chain deals, better distribution networks etc.

This is great for consumers - we get a more or less equivalent product at a cheaper price but it doesn't seem so great for competition if all the new products end up being made by the established players in a market. This is all just armchair economics though - I'm happy to listen to anyone who knows more about this and cares to answer my post.

In general I'm in favour of the patent system since, done properly, I think it should help get around those problems. I'm certainly not blind to the problems with the system though. Copyright is a different matter - I have no problems with the underlying ideas behind copyright law but the actual implementation (in my opinion) is a bloated mess of special interest provisions that have accreted over time. Unfortunately, copyright law is nothing like an oyster and those accretions have most definitely not produced a beautiful pearl.

Of course, I'm neither a copyright expert nor am I someone that depends on it for their livelihood, so take my opinion with the appropriate amount of salt.

Why on earth would I voluntarily license my patents under those terms? If I paid a fortune in legal bills to get a patent for defensive and/or offensive use ... why reduce it's value by making it unsaleable? It's a "tragedy of the commons" problem. If a company can make $1 by selling their patents to an NPE, even if that costs the overall industry $100 in future legal bills ... where is the incentive to selflessly forego that $1 in revenue? Until the incentive problem is addressed, I don't see any reason to hope for broad-based adoption of such a high-minded licensing scheme.

It's actually a bit worse than you complain about.

As described in the US Constitution, the purpose of patents—the justification for all the contention—is to

Quote:

promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

The Google Chastity Pledge (which it does not itself appear to be observing terribly scrupulously these days), is to deny the Authors and Inventors the Right to exclude others from using their work, and the right to transfer it to others (such as my children, along with my other property).

I don't see how Google has made a case that this initiative actually will prevent ANY problems of the sort they complain about (nor the problems that they themselves have caused by e.g., “loaning” patents to HTC so HTC could sue Apple). As somebody who would ALSO like patents to be more obviously applied, it'd seem the effort should go instead into supporting the PTOs of the world. But didn't Google back an initiative in that area that has had approximately zero impact past the PR stage?

I won't address all the details of your comment, but I will just say that no, I wasn't including companies with actual product lines like Philips or Dolby when I wrote about patent trolls that acquire their own patents. I think that's pretty clear in the post.

sprockets wrote:

Those are clearly not non practicing entities.

Dolby.Com wrote:

Dolby creates and licenses audio technologies that are inside your devices, not the devices themselves.

You knew that, right?

A HUGE fraction of our economy is exactly this type of intellectual property provider. The patented technologies are taken for granted by most, but a few moments' thought should allow any technologist to come up with dozens of examples.

And it gets worse: A quick google finds Dolby having acquired at least two other firms that specialized in audio IP, IMM Sound and Coding Technologies. Dolby, under the Google Chastity Pledge®, would have had no reason to pay for those companies — and those firms, perhaps with founders looking to retire, would have found zero buyers.

This whole Google broadside on patents doesn't stand even a few seconds of scrutiny.

Wow, I had no idea Google has made it search patents freely available! Good for them for not being total hypocrites.

Actually, Google's (Larry) Page Rank Algorithm—a clever application of Principle Components Analysis to huge, sparse connectedness matrices—is owned by Stanford U., where the work was done. It seems that Google is the sole licensee of the patent, and pays (paid?) $1 for the pleasure.

Yeah, Stanford U is one of those Evil Non-Practicing Entities.

PCA was itself invented in 1901 by Karl Pearson, one of our mathematical greats. This clearly shows that patents are not on ideas (almost a century old when Page got the patent) but rather on the implementation.

If you recall, the point of "tragedy of the commons" is that everyone will ended up worse off because everyone only does what's best for himself. So if a "tragedy of the commons" is recognized, then the logical course of action is to work cooperatively.

At least at Wikipedia, the tragedy is “depletion of a shared resource” by overuse.

We avoid this in many ways. For instance, in the US, the radio spectrum is auctioned to interested parties, on the logic that those willing to pay the most for a limited resource, can use it for the greatest economic good (can resell it to the most valuable end-use). Or, we enforce copyright & patent rights, preventing the copycats from printing 1¢-over-cost 49¢ copies of Harry Potter and The Goblet of Fire, and thereby depriving the author of any reward for her work. That is, she gets to put her work out for limited common use, so that her energies are not wasted.

None of these ways of preventing the tragedy of the commons is perfect, but it's pretty obvious that an unregulated free-for-all is probably the worst. If there's regulation, then some people will be stopped from doing what they want.

Why on earth would I voluntarily license my patents under those terms? If I paid a fortune in legal bills to get a patent for defensive and/or offensive use ... why reduce it's value by making it unsaleable? It's a "tragedy of the commons" problem. If a company can make $1 by selling their patents to an NPE, even if that costs the overall industry $100 in future legal bills ... where is the incentive to selflessly forego that $1 in revenue? Until the incentive problem is addressed, I don't see any reason to hope for broad-based adoption of such a high-minded licensing scheme.

The incentive is the reduced risk of some other company having the same thought and costing you some part of that $100. This solution is based on the expectation that a large number of companies will join this initiative and it will work only when a large number joins in.

Let's be clear: there is ZERO need to “patent” an invention unless you want the option of excluding others' use of it.

All you have to do is publish your invention in somewhat patent-like terms—making it “patently” obvious, the origin of the term. At this point, nobody else can later claim the invention, since it was widely known—obvious and non-original. No court on the planet would order you to pay anybody asserting your own invention. All you've done is forgo the right to claim exclusive, as in excluding others right to use your invention.

So: registered patents are inherently for the purpose of suing anybody who implements your invention without your express permission (including, possibly, a licensing fee). Google is attempting to redefine patents; the whole effort is horribly ill-thought-out. Since Google employs smart counsel, the counsel must have been charged with developing a position that allows them to exert patents in ways different from their earlier “pledges,” without contradicting their own PR.

That's rich coming from a company investigated for antitrust because it sued on SEP rather than grant it on fair licensing terms (Motorola), and outright steal (WebM)

Yes, real rich of them to steal webm aka vp8 from on2 for $124 million dollars.

As with almost all patent license deals, we will probably never know the amount that Google paid 11 members of MPEG-LA for the rights to use h.264 patents that VP8 infringed. Some experts on video coding could probably guess the specific patents that VP8 infringed, and therefore which particular 11 firms asserted that VP8 infringed their inventions. Unlike assertions that you see in the press sometimes about patent licenses, Google certainly knew the specifics before they agreed to the deal.

(Note to noobs: MPEG-LA is merely a private licensing organization that is expert in the issues of video licensing. The actual h.264 and other near-universally-used technologies are coordinated by the not-for-profit, international standards bodies ISO and ITU and the patents remain under the ownership of the individual authors, subject to FRAND requirements.)

Why on earth would I voluntarily license my patents under those terms? If I paid a fortune in legal bills to get a patent for defensive and/or offensive use ... why reduce it's value by making it unsaleable? It's a "tragedy of the commons" problem. If a company can make $1 by selling their patents to an NPE, even if that costs the overall industry $100 in future legal bills ... where is the incentive to selflessly forego that $1 in revenue? Until the incentive problem is addressed, I don't see any reason to hope for broad-based adoption of such a high-minded licensing scheme.

Try this scenario for example if Google beings a patent lawsuit again another company2 (who has its own set of unique patents) and Google looks to win that case, company2 may want to settle so Google might suggest joining this nexus of patents. Once this happens - the tipping point will be as more and more companies join this group the ones that do not are going to feel threatened since these companies (in the nexus) are more resistant to patent lawsuits and while those who are not part of the nexus could get sued but are not be able to counter sue due to the shared patents

The incentive here will probably be the amount of damage other companies can bring when going on the offensive and I think when companies and CEO target quarter on quarter revenue and profit targets - a differed earning would not mean too much. Might as well join a gang so as not be picked off standing alone.

lordmedikit wrote:

Whilst in some ways a interesting step, I'm not sure this necessarily removes the threat of an oligopoly situation where the big players get in bed together and collude to keep smaller players out and the market to themselves.

For small companies joining this group will be a huge benefit and going my Google slogan 'compete in the open market' - i don't think they will block small companies from joining this group.

Try this scenario for example if Google beings a patent lawsuit again another company2 (who has its own set of unique patents) and Google looks to win that case, company2 may want to settle so Google might suggest joining this nexus of patents. Once this happens - the tipping point will be as more and more companies join this group the ones that do not are going to feel threatened since these companies (in the nexus) are more resistant to patent lawsuits and while those who are not part of the nexus could get sued but are not be able to counter sue due to the shared patents

The incentive here will probably be the amount of damage other companies can bring when going on the offensive and I think when companies and CEO target quarter on quarter revenue and profit targets - a differed earning would not mean too much. Might as well join a gang so as not be picked off standing alone.

So you're saying Google is about to go on a patent offensive that'd give it rights to EVERYBODY ELSE's patents?

Naw, couldn't be.

The closest we actually see to this is the standards-essential patents that companies pledge to be offered to one another — and, the world at large — on FRAND terms. Motorola, Samsung and others are quite happy to try to block sales of any company that they accuse of not licensing on exorbitant terms.

So these deals would seem to still require a lot of attention from courts who sort out the BS from the actual patented and patent-worthy inventions.

The problem isn't patents or legitimately pursuing revenue for a valid patent. Rather, it is non-algorithmic SOFTWARE patents and the type of frivolous tat that Apple likes to patent. This is entirely an American created problem and it is time for Americans to follow the European model and invalidate all software patents as software is an industry which requires little prior investment to produce most so-called "innovations".

Google are also not trustworthy one bit when it comes to patents. Google's approach so far is to pretend that patents under GOOGLE CONTROL are somehow good for everyone and somehow "open".